ISLAMABAD - Pakistan has received much needed $3 billion from Saudi Arabia that would help in building country’s foreign exchange reserves and strengthening the local currency.
“Good news, US$3 billion Saudi deposit received by SBP. I want to thank His Excellency Crown Prince Mohammed Bin Salman and Kingdom of Saudi Arabia for the kind gesture,” said Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin on twitter on Saturday.
Saudi Arabia had announced financial assistance of $4.2 billion for Pakistan in October this year during the visit of Prime Minister Imran Khan to the kingdom. Saudi Arabia had agreed to revive its financial support to Pakistan, including about $3 billion in safe deposits and $1.2bn worth of oil supplies on deferred payments. “Under this deposit agreement, SFD (Saudi Fund for Development) shall place a deposit of USD 3 billion with SBP. The deposit amount under the agreement shall become part of SBP’s Foreign Exchange Reserves,” said the press release of SBP.
The financial assistance will help support Pakistan’s foreign currency reserves. Pakistan’s total liquid foreign reserves stood at $22.498.8 billion. The break-up of the figures shows that foreign reserves held by the SBP were standing at $16.01 billion and net foreign reserves held by commercial banks were standing at $6.488 billion. The reserves are on the declining side due to widening of current account deficit and previous loan repayment. During the week ended on November 26, 2021, the SBP’s reserves decreased by $244 million.
Pakistan’s rupee continued to tumble against the US dollar. The PKR closed at 176.77 against the USD after a day-on-day depreciation of 35 paisas or 0.20%. On Thursday, PKR closed at the then-record low of 176.42 against the USD. The fall comes as pressure mounts on the currency amid a widening trade deficit and falling foreign exchange reserves. The country’s trade deficit widened by 133.99 percent on a year-on-year basis and stood at $4.963 billion in November 2021 compared to $2.121 billion in November 2020. Imports witnessed 82.83% growth on a year-on-year basis in November 2021 and stood at $7.847 billion compared to $4.292 billion in November 2020. Exports recorded at $2.88 billion.
However, the much needed inflow from Saudi Arabia would help in country’s foreign exchange reserves and strengthening the local currency. Meanwhile, the officials in ministry of finance informed that government is all set to launch the Islamic denominated Sukuk Bond to earn $1 billion inflows by pledging one portion of the Motorway (M-1) as asset back guarantee. The federal cabinet had already granted approval and tax exemption for accomplishing this transaction. The Saudi assistance and inflow generated from Sukuk Bond are likely to reduce pressure on the foreign exchange reserves and currency depreciation, the official added.